This article will help many Americans to understand the process when they cannot pay their mortgage as many people are falling behind in payments due to the current market slump.
When a homeowner first misses a mortgage payment, the lender is not likely to take any foreclosing action against the homeowner. Friendly reminders plus fees and penalties will be sent to the homeowner by the lender until the homeowner misses at least 3 mortgage payments.
It should be mentioned that different mortgage lenders have different ways of doing business, some foreclosing more quickly and others giving the homeowner more time. The real estate market is in a serious slump right now, so giving the homeowner a little extra time is common because the banks are all busy foreclosing on other properties. Be advised that if you have not payed your mortgage in six whole months you should expect to receive foreclosure papers by that point.
How does a foreclosure work? The process is not definitive from one place to the next. Instead, it differs between states and municipalities. Regardless of location however, the foreclosure process usually begins with the Notice of Default, moves on to the Notice of Foreclosure, and finally results in the Notice of Trustee's Sale.
The real estate investor and local newspapers usually print three notices, starting with the Notice of Default. That will almost always tip off the real estate investors and start a flood of calls where they offer you much less money for it than your home is actually worth. If you do have some equity in your home (but not too much) then this option may be just what you need to save your credit record and start a new life fresh.
Prior to the Trustee's sale, homeowners are given one last chance to pay off the mortgage and save their home. That being said most homeowners cannot pay back the mortgage loan and their home sadly winds up at auction. Real estate investors or people searching for a deal on a home are typically the ones that purchase foreclosed homes. These homes are sometimes in bad need of repair, but they sell at prices that are below the market value at such a margin that they can make this money back in a resell.
When a home comes up for auction, and is sold to the person willing to bid the most, the owner will be evicted. The lender can (in most states) actually bill the homeowner for the difference between the selling price and what the homeowner owes.
A deficiency judgment can be imposed causing the homeowner to be evicted and thus owing many thousands of dollars in repairs! This sad but common situation in turn causes the homeowner to owe a huge debt, despite losing their home completely to foreclosure.
Foreclosure is an extremely serious problem right now in the United States and is clearly at an all-time high. Not only can it wreck your wallet, but it will most certainly ruin your credit record, making it impossible for you to get financially back on your feet at all for the entire next decade.
About the Author:
If you yourself, or someone you know is involved with a foreclosure, you'd be smart to learn specifically how does a foreclosure work in your city and state at the Foreclosures Help website.
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